My first big / higher end flip

6 Replies

Hi BP!

      After doing a number of remodels/rehabs on rental houses over the last 18 month or so, I decided to embark on my first BIG FLIP.  With purchase prices increasing way faster then rental prices, I thought I'd try a change of tactics as compared to my usual rehab-and-rent properties of which I'd done 6 of over the last year or so.

      I bought 11532 Via Vista for $320k.  While it was an auction property via Homesearch.com, I was still able to get a conventional financing in time to close on the auction timeline.  Kudos to my #1 realtor Edie, my lenders OMG, and their appraisers at Epic for both getting things done fast, and helping stall when appropriate!

     Having never undertaken a project of this size or scope, I was unsure of who to usefor the work.  My previous crews were better suited to smaller cosmetic rehabs that did not require permits.  Luckily my realtor let me know one of the agents in her office and her husband (who is a great contractor) were bidding against me.  They were excited to take the contracting job, as was I since I knew they were intimately familiar with the project.

     Foward 5 months or so, and the rehab is nearly complete and the property is on the market. We are still waiting for the deck to be replaced and new garage doors installed (and I'm really kicking myself for letting that part of the project lag).  The primary work on the house completed a few weeks ago.

   You can see the before pictures and appraisal here: 

https://www.biggerpockets.com/files/992/download

     You can see the after pictures here:

http://www.realtor.com/realestateandhomes-detail/1...

     I spent $320k purchase price, $130k or so on rehab (haven't run the final numbers) and expect to have $60k or so in quiet costs (loan, mortgage, realtor, closing, etc. costs).  I expect about $100k in profit of which I will share 10% of with my contractor and his wife (who helped me a ton with deisgn, finishes, etc).

    In the end, I should have gotten the project done much faster, and possibly a bit cheaper, but in choosing a contractor who did almost all of the work himself and who was intimately familiar with the project, was able to take the lazy way out and not fully scope the work or project upfront.  I had a number of other real estate projects going at the time, and the ability to put someone in I trusted to make the right decisions was worth it to me at the time, even if it meant the project took an extra month or two.

    In the future, I'm looking forward to doing a full scope of work and getting these projects done faster.  For now, fingers crossed I don't have to sit on this one too long.  Given this is a higher priced property in the area, I expect 60-90 days on market.  I think it's competitively priced, but given a somewhat rural market it's hard to estimate how long it will take to sell.

@John D.

Awesome job. Love the open concept and all the wood. Master bath looks really nice, as well. Congrats.

Curious on your arrangement with your contractor. Was there an agreed upon price for their work in addition to the 10% of profit? How was that structured? 

My contractor and his son worked for a flat hourly rate on this one.  The 10% profit share was essentially for him managing some sub-contractors at no charge to me, and for his wife's invaluable help, helping me pick materials, colors, finishes etc.  I learned a ton in that regard!

I've had a couple of private messages asking about getting an appraisal done on a bank owned property (without power or running water).  The folks at OMG lending and Epic appraisals that I referenced at the start of this post have not had a problem appraising in this situation -- they've done a few for me without power or water -- if you are looking for conventional loans on these types of places look them up!